Starbucks Has Ceded Control of Its 7,991 China Stores. The Money Is Going Into a US Turnaround.

Starbucks no longer runs its own stores in China.

Funds managed by Boyu Capital acquired a 60% stake in Starbucks China retail operations in a transaction that closed on 30 March, with Starbucks retaining a 40% interest and continuing to own and license the brand and intellectual property to the joint venture.

The venture oversees 7,991 company-operated coffeehouses, which have transitioned to a licensed operating model, with a stated shared aspiration to grow toward as many as 20,000 locations over time.

Boyu acquired the stake at a cash-free, debt-free enterprise valuation of roughly $4 billion. Starbucks has valued its total China retail business at more than $13 billion, comprising the sale proceeds, the value of its retained interest, and the net present value of licensing economics payable to it over the next decade or more.

What changed in the accounts

The structural consequence is visible in Starbucks' own filings, and it is substantial.

The company has transitioned from recording the revenues and expenses of the China business to recording only its share of income from the joint venture, recognised as income from equity investees under the equity method of accounting.

China has moved from being a operating segment Starbucks manages to a financial interest it holds. For a company that entered the market in 1999 and built it into its second-largest, that is a different relationship entirely.

Why Starbucks sold

The commercial position had deteriorated. Starbucks recorded a 1% decline in comparable sales in China across fiscal 2025, though fourth-quarter comparables rose 2% — improvement chief financial officer Cathy Smith attributed to tea latte product innovation and a fast-growing delivery business.

More significant is the competitive picture. Luckin Coffee now operates more stores in China than Starbucks, having won customers with substantially lower prices. Starbucks' premium "third place" positioning, which defined its China entry, has been undercut by a domestic competitor operating at a different price point and scale.

Boyu brings what Starbucks lacked: local consumer knowledge, real estate expertise and retail operating capability, particularly for expansion beyond major cities. Founded in 2011, the firm works with more than 200 portfolio companies and has offices in Hong Kong, Beijing, Shanghai and Singapore. Molly Liu remains chief executive of Starbucks China.

The structure has precedent. McDonald's and Yum! Brands both used local joint ventures in China — McDonald's subsequently increasing its minority stake from 20% to 48%, which suggests the arrangement can be reversed if performance justifies it.

Where the capital is going

The other half of the transaction is playing out in the United States.

Starbucks has been restructuring under chairman and chief executive Brian Niccol's "Back to Starbucks" programme, with nearly 1,000 layoffs announced in late 2025 and a further 300 corporate roles this year, 252 of them connected to Seattle. It is closing offices in Atlanta, Dallas and Chicago while opening a regional office in Nashville intended to employ 2,000 within five years — with sourcing, procurement and information technology teams relocating from Seattle.

Selling a majority stake in China released capital to reinvest elsewhere, and elsewhere is principally the domestic business.

Niccol has described China as remaining one of the most exciting long-term opportunities for Starbucks, and the partnership as accelerating its ability to grow with intention and discipline.

What to watch

Store growth is the measurable test. Getting from 7,991 to anything approaching 20,000 requires expansion into lower-tier cities where Luckin already operates.

The second is the licensing income. Starbucks' China economics now run through brand fees rather than store profits, which is a lower-risk and lower-upside position.

The third is whether Starbucks buys back in. The McDonald's precedent exists, and a 40% holder with brand ownership has options if the venture performs.